Start with the 28/36 rule
The 28/36 rule is the most durable way to size affordability, and it works in any currency or country because it is built on ratios, not amounts.
The first number is the front-end ratio: your total monthly housing payment should not exceed 28% of your gross (pre-tax) monthly income. The second is the back-end ratio: your housing payment plus every other recurring debt — loan repayments, card minimums, financing — should not exceed 36% of gross income. Lenders in many markets allow more, but these thresholds describe a payment you can comfortably carry rather than the maximum someone will approve.
To use it, take your gross monthly income, multiply by 0.28 to get your comfortable housing budget, then multiply by 0.36 and subtract your existing monthly debt to get your debt-limited budget. Your affordable payment is the lower of the two. If you carry significant debt, the 36% back-end limit usually binds first, which is why clearing debt before buying often raises your budget more than waiting for a pay rise. Both ratios use the same income base, so improving either side moves your number.
Why your payment must be full PITI, not just principal and interest
A common mistake is to size affordability against principal and interest alone. The 28% housing limit covers the entire cost of keeping the home, often called PITI: principal, interest, taxes and insurance — plus any recurring association or maintenance charges where they apply.
This matters because taxes and insurance are not trivial add-ons. Depending on where you live, they can add a meaningful slice on top of the loan payment, and that slice counts inside your 28% ceiling. If you budget only for principal and interest, you will overstate the price you can afford and feel stretched the moment the full bill arrives.
The practical fix is to model the complete payment before you shop. The Mortgage Calculator computes full PITI, so you can see the real monthly figure for a given price, rate and term rather than the principal-and-interest fragment a quick estimate gives you. Enter a candidate price, check the total payment against your 28% limit, and adjust. Because the calculator is multi-currency, the same workflow holds wherever you are: the ratios stay fixed, only the amounts change with your local taxes and premiums.
How down payment and interest rate move your ceiling
Two levers change how much home a given payment buys: your down payment and the interest rate.
A larger down payment lowers the amount you borrow, so a bigger share of every payment goes to the home rather than to interest — and in many markets a higher deposit unlocks better rates and removes extra insurance costs. The effect compounds: more deposit means a smaller loan and often a cheaper rate on it.
Interest rate is the other lever, and it is powerful because mortgages amortize. Early payments are mostly interest, so when rates rise, more of each payment is consumed by interest and the price your budget supports falls — sometimes sharply. A modest rate increase can cut your affordable price by a noticeable margin even though your payment hasn't changed. The reverse is true when rates fall.
Test both. In the Mortgage Calculator, hold your target payment fixed and vary the rate to see how your price ceiling swings, then vary the down payment to see how much borrowing-and-rate it removes. This shows whether saving a larger deposit or waiting for a better rate does more for you — and how exposed your budget is if rates move before you buy.
A simple step-by-step to estimate your own number
Follow these steps in order:
1. Find your gross monthly income — total pre-tax income across all earners on the loan.
2. Set the housing ceiling: multiply income by 0.28. This is the most you should spend on full PITI each month.
3. Set the debt ceiling: multiply income by 0.36, then subtract your existing monthly debt payments. To total those debts accurately, the Debt Payoff Calculator lays out every balance and its monthly cost so your back-end ratio reflects reality.
4. Take the lower of step 2 and step 3 — that is your affordable monthly payment.
5. Convert payment to price: in the Mortgage Calculator, enter your down payment, a realistic rate and term, then adjust the home price until the full PITI payment matches your affordable payment from step 4.
6. Sanity-check against renting: if buying stretches you, the Rent Affordability Calculator applies the same income logic to rent, and comparing the two tells you whether buying now is the stronger move or whether renting while you build a deposit wins.
7. Leave a margin. The ceilings are limits, not targets — staying below them gives room for rate changes, maintenance and life.